The offer mentioned below for the Chase Sapphire Preferred® Card is no longer available.
Becoming a prime borrower is a good financial goal to have. And if you're already there, maintaining your score will pay off.
Those with prime credit have an easier time getting approved for new credit cards and loans because their credit score is on the higher end. A high credit score indicates that you have the ability to pay your bills on time and carry low balances.
Card issuers and lenders have more confidence in lending money to a prime borrower rather than someone who is subprime because prime applicants are statistically less likely to default, or fail to make their payments. And even if both a prime and a subprime borrower qualify for the same credit card or loan, the prime cardholder will most likely receive better terms, a higher credit limit and a lower interest rate.
In fact, having super-prime credit can save you more than 3 times on interest payments.
So you can compare your own financials to that of the average prime borrower and see how you stack up, Select took a look at average credit score, income and debt. Using data from Experian, one of the three main credit bureaus, here is a snapshot of prime data across U.S. consumers.
Snapshot of a prime borrower: Their credit score
Experian's most recent data from Q1 2020 shows that prime borrowers have an average 767 FICO credit score.
On the FICO credit score scale ranging between 300 on the low end to 850 on the high end, a 767 falls under "very good."
- Poor: 300 to 579
- Fair: 580 to 669
- Good: 670 to 739
- Very good: 740 to 799
- Exceptional: 800 to 850
If you have prime credit, it's likely you fall within this range. According to Experian's annual consumer credit review published in January of this year, a quarter (25%) of Americans held a "very good" credit score in 2019.
Learn more: 50% of Gen Z has a credit card and a prime credit score—and they’re more credit active than millennials were
Having good or excellent credit will help you qualify for the best credit cards, many of which are now offering limited-time welcome bonuses. These are great opportunities that can save you money now and in the future, especially on travel.
For instance, the Chase Sapphire Preferred® Card (see rates and fees) offers 100,000 bonus points after you spend $5,000 on purchases in the first 3 months from account opening.
The popular travel card also rewards you for your purchases. Find out if you're eligible for Chase Sapphire Preferred’s welcome bonus here.
Another option to consider is the Capital One Venture Rewards Credit Card: Earn a one-time bonus of 75,000 miles once you spend $4,000 on purchases within 3 months from account opening, equal to $750 in travel
Like the Sapphire Preferred card above, the Venture Rewards card also offers rewards on your purchases. Given traveling has slowed during the coronavirus pandemic, new cardholders can also redeem this bonus for a statement credit to cover their spending on food delivery, takeout and streaming services.
The Capital One Venture Rewards Credit Card has a reasonable annual fee and earns flexible travel rewards, which makes it a great travel card for beginners or heavy travelers.
- Valuable welcome offer worth at least $750 in travel
- You can transfer miles to over 15 Capital One partners, including Emirates Skywards, Choice Privileges and Singapore Airlines KrisFlyer
- No foreign transaction fees
- Lacks ongoing travel benefits such as statement credits or lounge access
- Limited bonus spending category that only applies to certain Capital One Travel bookings
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn a one-time bonus of 75,000 miles once you spend $4,000 on purchases within 3 months from account opening, equal to $750 in travel
- Earn unlimited 2X miles on every purchase, every day
- Earn 5X miles on hotels, vacation rentals and rental cars booked through Capital One Travel
- Miles won't expire for the life of the account and there's no limit to how many you can earn
- Receive up to a $120 credit for Global Entry or TSA PreCheck®
- Use your miles to get reimbursed for any travel purchase—or redeem by booking a trip through Capital One Travel
- Enjoy a $50 experience credit and other premium benefits with every hotel and vacation rental booked from the Lifestyle Collection
- Transfer your miles to your choice of 15+ travel loyalty programs
- Top rated mobile app
Balance transfer fee
$0 at the Transfer APR, 4% of the amount of each transferred balance that posts to your account at a promotional APR that Capital One may offer to you
Foreign transaction fee
None
Snapshot of a prime borrower: Their income and debt levels
Prime borrowers have, on average, an estimated $98,206 yearly income and an average $110,110 in total debt, according to Experian's Q1 2020 data.
It may first come off as surprising that consumers with good credit have debt. Debt isn't desirable, but borrowing at good rates can be an important part of a financial plan. Over time, you can leverage your assets, like a home, to grow your wealth.
And it's actually important for your credit score to have a mix of credit accounts. Your credit mix makes up 10% of your FICO credit score, so making on-time payments on everything from credit cards to student loans, car payments, plus a mortgage, shows that you can successfully manage different types of debt.
Experian provided the below additional data for the average prime consumer:
- Credit cards: 4.5
- Credit card balance across all cards: $6,236
- Additional retail / store credit cards: 3.4
- Retail / store credit card balance across all cards: $952
- Student loan balance: $37,705
- Auto balance: $19,889
- Mortgage balance: $216,070
As you look at this data, it's important to note that with a higher credit score you likely get approved for credit cards with higher credit limits. This means that you could carry a balance on your credit card month to month and still maintain a low credit utilization rate, which helps keep a steady score.
While this can benefit prime borrowers, it's always ideal to pay your credit card bills in full by the time they are due.
